Business Registration
A. Procedure for Business Registration (Article 5 of the Value-added Tax Act)
· Every business establishment shall be registered.
· If you are not a per-business unit taxpayer, or if you are registering several business establishments , an individual registration has to be made for each establishment.
· Within 20 days from the day you start your business, you must apply, with the required documentation, in the civil service area of the national tax service with jurisdiction in the area of your business address. Business registrations can be initiated before your business begins, but you must apply in person.
· If an agent applies for you, the agent should bring both your and your agent’s ID cards, and shall write down all the personal information required on the business registration application and apply in person.
· If 2 or more persons are running a joint business, registration should be done under the name of one of the joint operators of that business.
B. The Per-business Unit Taxpayer System
· If two establishments are run by the same person, and that person has registered as a per-business unit taxpayer with the National Tax service in the jurisdiction where the principal place of business is done, he or she may report & pay the associated taxes for each business together.
· If you are opening 2 or more establishments including the main office or the principal place of business and desiring to be taxed per business unit, you should register with the head of the National Tax Service with jurisdiction over the location of the main office or the principal place of business within 20 days from the opening date of your business. (business registration form)
· If the existing business person wishes to be taxed per business unit, he/she should register 20 days prior to the beginning of the taxation period. (business unit taxpayer registration form) Apply Online : Online Application Connect to the National Tax Service website (http://www.hometax.go.kr/home/eaeehpe10.jsp) to apply The required documentation (listed on the next page) should be scanned in advance. Korean nationals residing abroad will need the additional documents below.
1. A registration certificate as a Korean national residing abroad, a copy of the registration report, or a copy of the Korean national’s passport photo page.
2. If the business owner does not reside in the business establishment mainly or resides there less than 6 months, he/she shall designate a tax manager and report it.
C. Simplified Taxpayer vs. General Taxpayer
1) Simplified taxpayer: individual business whose expected annual sales is less than KRW 48,000,000 General taxpayers pay a 10% tax rate, and all the VAT on the purchase tax invoice it receives when purchasing the goods . In other words, tax amount of the purchase tax invoice (10% of the purchase amount) is all deducted. If your annual sales for the last year were KRW 48 million or above, you will be classified as a general taxpayer.
2) General taxpayer: Individual taxpayer other than a simplified taxpayer Businesses eligible for a variety of tax benefits when VAT is charged. Of individual businesses, those whose annual sales do not reach KRW 48 million, (VAT included), retail stores, restaurants, hair salons running business in non-urban areas or the outskirts of the capital area, and the real estate sales, real estate brokerages, appraisal valuation businesses are not eligible for the simplified taxing . Even though the low tax rate of 0.5-3% is applied, only 5-30% of purchase tax amount may be deducted, and the tax invoice may not be issued. * How to calculate tax amount: sales × value added rate per business × tax rate (10%) Even if the sales amount does not reach KRW 48 million, of the businesses in the center of the city, manufacturers and real estate sales are not eligible for simplified taxation.
D. Documents to be submitted when registering your business
1) Individuals
1. 1 copy of Business Registration form
2. copy of lease contract (only for business establishments that are leasing) * Provided however, for sublease contracts, a copy of the sublease contract shall be required (consent or authorization from the building owner shall be marked.)
3. Copy of the Permission (registration, report) Certificate, (corresponding businesses) – In case of the Registration prior to the Permission (registration, report), the Copy of the Business Registration Application or such as Permission (registration, report) or the Prospectus
4. Partnership Agreement (for Joint Businesses)
5. Korean nationals residing abroad, documents proving their alien status: passport copy or copy of the alien registration card. For non-Korean residents: tax manager designation report.
2) Profit-making Corporation
1. 1 copy of the Application for Registration Incorporation and the Business Registration form
2. 1 copy of the Corporate Registration * In case the consent to the confirmation of the personnel in charge is not given, the document the applicant directly should submit .
3. (Corporation Name) 1 copy of lease contract (only for businesses currently leasing)
4. 1 copy of Shareholders or Investors List
5. 1 copy of the Business Authorization, Registration, and Report stamped Certificate (only for the corresponding corporations) – In case the registration (registration, report), prior to the permission registration : copy of the permission (registration) application or business plan
6. 1 copy of List of in-kind Contributions (only for in-kind contribution corporations)
3) Non-profit Korean
1. 1 copy of Application for Registration Incorporation and Business Registration form
2. 1 copy of the Corporate Register ** In case the consent to the confirmation of the personnel in charge is not given, the document the applicant directly should submit .
3. (Corporation Name) 1 copy of lease contract (only for businesses currently leasing)
4. 1 copy of the Business Permission, Registration, and Report stamped Certificate (only for the corresponding corporations) – In case the registration (registration, report), prior to the permission registration : copy of the permission (registration) application or business plan
5. 1 copy of Incorporation Permission Certificate from the competent administrative agency
4) Koreans
1. 1 copy of Application for Registration Incorporation and Business Registration form
2. 1 copy of the Corporate Register * In case the consent to the confirmation of the personnel in charge is not given, the document the applicant directly should submit . *If the registering business is a corporate branch that is not in the registry, the minutes from a board of directors’ meeting that can confirm establishment of the branch. (When convening a board of directors’ meeting is difficult due to minor reasons such as the direct sales shop establishment , a copy of the document with the CEO’s approval .)
3. 1 Copy of lease contract (only for business currently leasing)
E. Receiving the Business Registration Certificate
· A business registration certificate is granted within 3 days of application.
· The certificate is granted after consulting and verification of the required documentation in the civil service area.
Business Registration Certificate
